v. Count One: 18 U.S.c. § 371 (conspiracy); OUSAMA M ......Accordingly, Innospec was an issuer...

UI\ITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA, CRIMINAL NO. 08-246-ESH

v. VIOLATIONS:Count One: 18 U.S.c. § 371 (conspiracy);Count Two: 15 U.S.C. § 78dd-l

and 18 U.S.c. § 2 (ForeignCorrupt Practices Act)

OUSAMA M. NAAMAN

Defendant

SUPERSEDING INFORMATION

The Cnited States alleges that:

GENERAL ALLEGATIONS

The Foreign Corrupt Practices Act

At all times material to this Superseding Information, unless otherwise alleged:

L. The Foreign Corrupt Practices Act of 1977 ("FCP A"), as amended, Title 15,

United States Code, Sections 78dd-l, et seq., was enacted by Congress for the purpose of, among

other things, making it unlawfl for certain classes of persons and entities to act corruptly in

furherance of an offer, promise, authorization, or payment of money or anything of value to a

foreign government official for the purpose of securing any improper advantage, or of obtaining

or retaining business for, or directing business to, any person.

Relevant Entities and Individuals

2. INOSPEC INC., previously known as Octel Corporation, ("Innospec"), was a

Delaware company with executive offces in the United Kingdom. Iimospec was engaged in the

manufacture and sale of specialty chemicals and gasoline additives, including tetraethyllead

("TEL"), which is used in the refining ofleaded gasoline and some types of aviation fueL.

Case 1:08-cr-00246-ESH Document 15 Filed 06/24/10 Page 1 of 28

Innospec issued and maintained a class of publicly-traded securties registered pursuant to

Section 12(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 781), which were traded on

the NASDAQ after March 22, 2006. Prior to March 22, 2006, Innospec's securities were traded

on the New York Stock Exchange. As such, Innospec was required to file periodic reports in

Washington, D.C. with the United States Securities and Exchange Commission under Section 13

of the Securities Exchange Act (15 U.S.C. § 18m). Accordingly, Innospec was an issuer

organized under the laws of the United States, within the meaning of the FCPA, 15 U.S.C. §

18dd-l(a) and (g).

3. Innospec Ltd. ("Limited"), previously known as Associated Octel Company, Ltd.,

a wholly-owned subsidiary of Innospec, also manufactured and sold fuel and specialty

chemicals, including TEL. Limited was headquartered in the United Kingdom.

4. Alcor Chemie Vertiebes GmbH ("Alcor"), a wholly-owned subsidiary of

Innospec incorporated in Switzerland, also manufactured and sold TEL. Alcor was

headquartered in Zug, Switzerland, and maintained a manufacturing plant in the Federal

Rcpublic of Gcrmany until in or around March 2002.

5. The Iraqi Ministry of Oil ("MoO") and its component refineries and directorates

were customers ofInnospec and Alcor. MoO, including all its refineries, was a department,

agency, and instrumentality of the Government ofthe Republic ofIraq within the meaning of the

FCPA, 15 U.S.C. § 78dd-I(í)(1)(A).

6. The Trade Bank of Iraq, wholly-owned and controlled by the Iraqi Ministry of

Finance, was a department, agency, or instrumentality ofthe Govermnent of the Republic ofIraq

within the meaning of the FCPA, 15 U.S.C. § 78dd-I(f)(l)(A).

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7. Defendant OUSAMA M. NAAMAN, a Lebanese/Canadian dual national, acted

as the agent for Innospec and Alcor in Iraq and elsewhere beginning in at least 1995 and

maintained his principal offices in Abu Dhabi, United Arab Emirates. On behalf of Iiospec and

Alcor, NAAMAN negotiated contracts with the MoO to provide TEL to the oil refineries

operating in Iraq. Interact S.A.R.L. and Tawam Commercial Est. ("NAAMAN's companes")

were companies controlled by NAAMAN, which were used to faciltate the payment of bribes to

and for the benefit of offcials of the MoO.

8. "Executive i," a British citizen, was a senior executive ofInnospec and Limited

until in or around April 2005.

9. "Executive 2," a United States citizen, was a senior executive ofInnospec and

Limited from in or around December 2002 until in or around mid-2008.

i O. "General Manager," a German citizen, was the General Manager of Alcor.

Ii. "Director," a British citizen, was a division managing director for Innospec.

12. "Iraqi Offcial A," an Iraqi citizen, was a senior official in the MoO.

13. "Iraqi Official B," an Iraqi citizen, was a scnior official in the MoO.

14. "Iraqi Offcial C," an Iraqi citizen, was a senior official in the MoO.

The United Nations Oil-for-Food Program

15. On or around August 6, 1990, days after Iraq's invasion of Kuwait, the U.N.

adopted Securty Council Resolution 661, which prohibited U.N. member states from transacting

business with Iraq, except for the purchase and sale of humanitarian supplies. Resolution 661

prohibited virtually all direct financial transactions with the governent ofIraq.

3


16. On or around April 15, 1995, the U.N. adopted Security Council Resolution 986,

which provided a limited exception to the Iraq sanctions rcgimc in that it allowed Iraq to sell its

oiL. However, Resolution 986 required that the proceeds of oil sales be used by the Iraqi

govenunent to purchase humanitarian supplies for the Iraqi people, including food and

equipment to maintain and service Iraq's oil sector. Hence, this program became known as the

Oil for Food Progran1. Payments made to the Iraqi governent which were not approved by the

U.N. and which were outside the strict contours of the OFFP were prohibited.

17. The rules of the OFFP required that the proceeds from all sales ofIraqi oil be

deposited into a U.N.-controlled escrow account at the New York branch of Banque Nationale de

Paris ('BNP-Paribas"). That escrow account fuded the purchase of humanitarian goods by the

Iraqi governent.

18. Under the provisions of the OFFP, a supplier of humanitarian goods contracted

with a ministry or other department of the Iraqi government to sell goods to the Iraqi

government. Once that contract was finalized, the contract was submitted to a U.N. Committee

("the 661 Committee") which reviewed the contracts to ensure that their terms complied with all

OFFP and Iraqi sanction regulations. The 661 Committee accepted the contracts, rejected them,

or asked the supplier to provide additional information upon which the committee could malee a

decision.

19. If a contract was approved by the 661 Committee, a letter of credit was issued by

the New York branch ofBNP-Paribas to the supplier's ban stating that the supplier would he

paid by the OFFP for the relevant goods once certin conditions were met, including delivery of

the goods to Iraq and inspection ofthe goods by a U.N. contractor. Once those conditions were

4


deemed by the U.N. to have been met, the U.N. would direct BNP-Paribas to release payment to

the supplier.

20. On or around December 10, 1996, the first Iraqi oil exports under the OFFP

began. The OFFP continued from in or around December 1996 until the United States invasion

ofIraq on or around March 19, 2003. From in or around December 1996 through March 2003,

the United States government prohibited United States companies and individuals from engaging

in transactions with the government of Iraq, unless such transactions were authorized by the U.N.

pursuant to the OFFP. 31 C.F.R. § 575.201, et seq.

21. Beginning in approximately August 2000, the Iraqi government demaiided that

suppliers of humanitarian goods pay a kickback, usually valued at 10% of the contract price, to

the Iraqi government in order to be awarded a contract by the govermnent. These kickbacks

violated U.N. OFFP regulations and U.N. sanctions which prohibited payments to the Iraqi

goverment which were not expressly approved by the U.N. and which were not contemplated

by OFFP guidelines.

22. Often, these kickbacks wcrc tcrmed "after sales service fees" CASSFs"). They

did not, however, involve the performance of any actual service by the supplier. Typically, these

ASSFs were included in the contract price submitted by the supplier to the U.N. without

disclosing to the U.N. the fact that the contract contained an extra i 0% which would be kicked

back to the Iraqi govermnent. Including the i 0% in the submitted contract price allowed the

supplier to avoid paying the i 0% out of its profits; instead, the suppliers caused the U.N.,

unknowingly, to fud the kickbacks to the Iraqi govermnent.

5


23. In many cases, during or after contract negotiations, the Iraqi governent asked

the supplier to sign an auxiliary contract, usually called a "side letter," memorializing thc

supplier's commitment to pay the ASSFs. These side letters usually stated explicitly that the

supplier agreed to pay a set amount, approximately i 0% of the contract price, to the Iraqi

government in advance of the arival of the goods in Iraq.

24. Some suppliers described the ASSFs as such in the contracts submitted to the

U.N. for approval, thereby leading the U.N. to believe that actual after-sales services were being

provided by the supplier. Other suppliers disguised the ASSFs by inserting fictitious line items

into the contracts for goods or services that were not being provided. Stil other suppliers simply

inflated their contract prices by i 0% to account for the payments they would malee, or cause to

he made, to the Iraqi gove1lment.

COUNT ONE

(Conspiracy, 18 U.S.c. § 371)

THE CONSPIRACY AND ITS OBJECTS

25. Paragraphs i through 23 ofthis Superseding Information are realleged and

incorporated by reference as if set out in fulL.

26. From in or around March 2001, through in or around June 2008, in the District of

Columbia and outside the jurisdiction of any particular state or district, NAAMAN and others,

Imown and unknown to the Grand Jury, did unlawfully and knowingly combine, conspire,

confederate, and agree to commit the following offenses against the United States:

6


a. to knowingly devise, and intend to devise a scheme and artifice to defraud

the United Nations and the Oil-for-Food Program, and to obtain money and property by means of

materially false and fraudulent pretenses, representations, and promises, through the use of

interstate and foreign wire communications, in violation of Title 18, United States Code, Section

1343;

b. to offer, pay, promise to pay, and authorize the payment of money and

other things of value to Iraqi officials, directly and indirectly, for purposes of: (i) influencing acts

and decisions of such Iraqi officials in their official capacities; (ii) inducing such Iraqi officials to

do and omit to do acts in violation of the lawful duties of such offcials; (iii) securing an

improper advantage; and (iv) inducing such Iraqi officials to use their influence with the Iraqi

government and instrumentalities thereof to affect and influence acts and decisions of such

government and instrumentalities, in order to assist NAAMAN, Executive i, Executive 2,

Director, Innospec, Alcor, and others, in obtaining and retaining business for and with, and

c1recting business to, Innospec and its subsidiaries, in violation of Title 15, United States Code,

Section 78dd-l; and

c. to knowingly falsify and cause to be falsified books, records, and accounts

required to, in reasonable detail, accurately and fairly reflect the transactions and dispositions of

the assets ofInnospec, an issuer within the meaning of the FCP A, in violation of Title 15, United

States Code, Sections 18m and 18ff.

7


PURPOSE OF THE COJ\SPIRACY

27. The primar purpose of the conspiracy was to obtain and retain lucrative business

with the governent of Iraq through the payment and promise of payment of kickbacks to the

Iraqi governent and bribes to officials ofthe Iraqi govermnent.

MANNER AND MEANS OF THE CONSPIRACY

28. To achieve (he goal of the conspiracy, NAAMAN, Executive i, Executive 2,

Director, Innospec, Alcor, and others used the following marer and means, among others:

a. It was part of the conspiracy that NAAMAN agreed to pay kickbacks and

caused kickbacks to be paid to the Government of Iraq in exchange for contracts awarded to

Alcor by the Government of Iraq pursuant to the OFFP.

b. It was a further part of the conspiracy that Innospec, through Alcor,

submitted contracts to the U.N. which failed to disclose and concealed the fact that the prices of

the contracts had been inflated by i 0% in order to generate the money that was used to pay

kickbacks to the government ofIraq.

c. It was a fUliher part of thc conspiracy that NAAMAN and Im10spec

caused the transmission of international wire communications to and from the United States to

give notice to the U.N. that goods had been shipped to, and inspected in, Iraq and to give notice

to Alcor's bank in Switzerland that the U.N. was authorizing payments pursuant to the contracts.

d. It was a further par of the conspiracy that NAAMAN falsified invoices

for reimbursement of the kickbacks, thereby causing Alcor to falsify its corporate books and

records, in order to conceal the true nature of the payments in the consolidated books and records

of Innospec.

8


e. It was a further part of the conspiracy that NAAMAN, on behalf of

Innospec and with the authorization of Director and Executive 2, would pay $150,000 in bribcs

to officials of the MoO to ensure that methylcyclopentadienyl manganese tricarbonyl ("MMT"),

a chemical which could be used as an alternative to TEL that is not manufactured by Innospec,

Limited, or Alcor, but is manufactured by a competitor, failed a field trial test and therefore

would not be used by the MoO as a replacement for TEL.

f. It was a further par of the conspiracy that NAAMAN, on behalf of

Innospec and with the authorization of Director and Executive 2, offered, paid, promised to pay,

and authorized the payment of money and other things of value to Iraqi offcials to secure sales

of TEL by Innospec and Alcor, thus assisting in obtaining and retaining business for and with,

and directing business to, Iiospec.

g. It was a furher part of the conspiracy that NAAMAN, Executive 2, and

others knowingly falsified and caused to be falsified books, records, and accounts required to, in

reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of

Irmospec.

OVERT ACTS

29. In furterance of the conspiracy and to accomplish its unlawful objects, the

following overt acts, among others, were committed by the defendant and his co-conspirators

within the lenilory of the United States and elsewhere:

9


PAYMENTS TO THE GOVERNMENT OF IRAQ

30. On or around November 23, 2000, General Manager signed a contract on behalf

of Alcor with NAAJ1AN, which provided that NAAMAN would be Alcor's sole agent under the

OFFP, and would receive a 2% commission on sales above $7,000 per metric ton.

3l. On December 14, 2001, General Manager sent a letter to NAAMAN increasing

his "commission" by 12%. This increase was comprised of the i 0% kickback to the Iraqi

government and an additional 2% commission for NAAMAN for delivering the kickback, all

above and beyond NAAMA's usual 2% commission.

Contract 830584

32. On or around March 19, 2001, NAAMAN submitted a bid in response to a tender

issued by the MoO for the purchase of TEL for use at Basrah Refinery. The bid was in the name

of General Manager on behalf of Alcor. The bid listed a price of £7,800 per metric ton.

33. In or around early April 2001, NAAMAN submitted another bid for the sale of

TEL on the same tender, dated March 19,2001. The bid was in the name of General Manager on

behalf of Alcor. The bid listed a price of £8,580 per metric ton, a 10% incrcase over the original

bid.

34. On or around April 16,2001, NAAMAN signed a side letter on behalf of Alcor

promising to pay a kickback of £381,888 to the Iraqi govermnent in exchange for being awarded

Contract 830584.

35. On or around April 25, 2001, NAAMAN, acting on behalf of Alcor, signed a

contract with the MoO for the provision of TEL to Basrah Refinery, subsequently referenced by

the U.N. as Contract 830584, with a total contract price of £4,200,768. This total included the

10


extra 10% fee promised in the side letter. This fee was concealed in contracts and

correspondence with the U.N. and was intended to be used to pay a kickback to thc Iraqi

government through NAAtfAN and his companies.

36. On or around August 30, 2001, Alcor's actions caused the New York branch of

BNP-Paribas to send, via an international electronic wire communcation, a notice to the Union

Bank of Switzerland in Zurich, Switzerland, notifying it of the issuance of a letter of credit in

favor of Alcor, authorizing the eventual payment of €4,200,768 from the OFFP escrow fund

maintained at BNP-Paribas to Alcor, which represented payment for Contract 830584.

37. On or around March 4, 2002 and April 2, 2002, the arrival of a shipment TEL in

Iraq caused a company based in Geneva, Switzerland, that provided commercial inspection

services on behalf of the U.N. in Iraq ("he inspection company"), to send from Iraq to the U.N.

in New York, via international wire communication, notification that the TEL purchased

pursuant to Contract 830584 had been received and inspected by the inspection company in Iraq,

thereby triggering payment by the U.N. to Alcor for Contract 830584.

38. On or around December 20,2001, Alcor paid NAAMAN approximately €39,312

in agent's fees and €196,560 to reimburse him for kickbacks paid on Contract 830584.

39. On or around January 17, 2002, Alcor paid NAAMAN approximately €37,065.60

in agent's fees and €185,328.00 to reimburse him for kickbacks paid on Contract 830584.

40. On or around April 8, 2002 and April 30, 2002, by international wire

communication, BNP-Paribas transferred a total of approximately €4, 186, 195.99 to Alcor's

account in the Union Ban of Switzerland in Zurich, Switzerland, in payment for Contract

830584.

II


4l. On or around May 7, 2002, Alcor paid NAAMAN approximately €76,377.60 in

agent's fees on Contract 830584.

Contract 930208

42. On or around March 29,2001, NAAN submitted a bid in response to a tender

issued by the MoO for the purchase of TEL for use at Daura Refinery. The bid was in the name

of General Manager on behalf uf Akur. The bid listed a price of €7,850 per metric ton.

43. In or around April 2001, NAAMAN submitted another bid for the sale of TEL on

the same tender, date March 29, 200 i. The bid was in the name of General Manager on behalf of

Alcor. The bid listed a price of €8, 700 per metric ton, an 11 % increase over the original bid.

44. On or around May 31,2001, NAAMAN sent a fax to General Manager,

requesting that he sign the contract for the Dama Refinery tender. NAAMAN stated in the letter

that the contract price includes a "2% + 2%" commission for his company and an additional 10%

described as "Additional Money for Third Pary Reimbursement."

45. On or around June 2, 2001, General Manager signed a side letter on behalf of

Alcor promising to pay a kickback of €255,000 to the Iraqi govermnent in cxchangc for being

awarded Contract 930208.

46. On or around June 3, 200 I, General Manager signed a contract with the MoO for

the provision of TEL to Daura Refinery, subsequently referenced by the U.N. as Contract

930208, with a total contract price of€2,61O,000, which included the extra 10% fee promised in

the side letter. This fee was concealed in contracts and correspondence with the U.N. and was

intended to be used to pay a kickback to the Iraqi government through NAAMAN and his

companies.

12


47. At a meeting in France on or around August 31, 2001, NAAMAN advised

Executive I and General Manager that each contract would have an additional i 0% added on to

the sale price, which would be "reimbursed to the client" via a bank guarantee established at the

Bank of Beirut in Lebanon.

48. On or around September 7, 200 I, Alcor's actions caused the New York branch of

BNP-Paribas to send, via an international electronic wire communication, a notice to the Union

Ban of Switzerland in Zurich, Switzerland, notifying it of the issuance of a letter of credit in

favor of Alcor, authorizing the eventual payment of £2,61 0,000 from the OFFP escrow fund

maintained at BNP-Paribas to Alcor, which represented payment for Contract 930208.

49. On or around February 19,2002, Alcor paid NAAMAN approximately £47,100 in

agent's fees and £255,000 to reimburse him for kickbacks paid on Contract 930208.

50. On or around March 19, 2002, Rafidahn Bank in Beirut requested that Rafidal

Bank in Bagdad credit £255,000 to "AI Daura Retìnery/Baghdad" from "Bank of Beirut-Beirut."

51. On or around May 31, 2002, the arrival of a shipment of TEL in Iraq caused the

inspection company to send from Iraq to the U.N. in New York, via intemational wire

communication, notitìcation that the Alcor products purchased pursuant to Contract 930208 had

been received and inspected by the inspection company in Iraq, thereby triggering payment by

the U.N. to Alcor for Contract 930208.

52. On or around June 25, 2002, by international wire communcation, BNP-Paribas

transferred a total of approximately £2,600,740.77 to Alcor's account in the Union Bank of

Switzerland in Zurich, Switzerland, in payment for Contract 930208.

13


Contract 930299

53. On or around May 11,2001, NAAMAN submittcd a bid in response to a tender

issued by the MoO for the purchase of TEL for use at Baiji Refinery. The bid was in the name of

General Manager on behalf of Alcor. The bid listed a price of €8,330 per metric ton.

54. In or around June 2001, NAAMAN submitted another bid for the sale of TEL on

the same tender, dated May i 1, 200 i. The bid was in the name of General Manager on behalf of

Alcor. The bid listed a price of €9, 164 per metric ton, a i 0% increase over the original bid.

55. In or around mid-2001, NAAMAN signed a side letter on behalf of Alcor

promising to pay a kickback of €663,652 to the Iraqi govemment in exchange for being awarded

Contract 930299.

56. On or around July 8, 2001, General Manager signed a contract with the MoO for

the provision of TEL to Baiji Refinery, subsequently referenced by the U.N. as Contract 930299,

with a total contract price of€7,291,000, which included the extra 10% fee promised in the side

letter. This fee was concealed in contracts and correspondence with the U.N. and was intended

to be used to pay a kickback to the Iraqi govermnent through NAAMAN and his company.

57. On or around October 17,2001, Alcor sent a fax, via an international electronic

wire communication, from its offices in Switzerland to the Office of the Iraq Program of the

United Nations in New York, amending the contract to increase its total value to €16,495,200.

58. On or around December 5, 2001, Alcor's actions caused the New York branch of

BNP-Paribas to send, via an international electronic wire communication, a notice to the Central

Bank of Iraq in Baghdad, Iraq, notifying it of the issuance of a letter of credit in favor of Alcor,

14


authorizing the eventual payment of€16,495,200 from the OFFP escrow fund maintained at

BNP-Paribas to Alcor, which represented paymcnt for Contract 930299.

59. On or around April 13, 2002, Rafidahn Banc in Beirut requested that Rafdahn

Bank in Bagdad credit €280,724 to "Ministry of Oil / North Refineries - Baiji" from "Ban of

Beirut-Beirut. "

60. On or around April 22, 2002, Rafidahn Ban in Beirut requested that Rafidahn

Bank in Bagdad credit €138,450 to "North Refineries" from "Ban, of Beirut-Beirut."

6l. On or around April 9, 2002, April 14, 2002, April 22, 2002, May 8, 2002, May

24, 2002, and June 18, 2002, the arrival of a shipment of TEL in Iraq caused the inspection

company to send from Iraq to the U.N. in New York, via international wire communication,

notification that the Alcor products purchased pursuant to Contract 930299 had been received

and inspected by the inspection company in Iraq, thereby triggering payment by the U.N. to

Alcor for Contract 930299.

62. On or around May 7, 2002, May 13,2002, May 31, 2002, June 19, 2002, and July

11,2002, by intcrnational wire connunication, BNP-Paribas transferred a total of approximately

€16,415,325.32 to Alcor's account in the Union Bank of Switzerland in Zurich, Switzerland, in

payment for Contract 930299.

63. In or around 2002, Innospec, through Alcor, paid NAAMAN a total of

approximately €1,501,200 to reimblUse him for kickbacks paid under Contract 930299.

Contract 1230520

64. On or around July 31, 2002, NAAMAN submitted a bid in response to a tender

issued by the MoO for the purchase of TEL for use at Daura Refinery. The bid was in the name

15


of General Manager on behalf of Alcor. The bid listed a price of €I 0,437 per metric ton, which

included the extra 10% kickback to the Iraqi govermnent. This fee was concealed in contracts

and correspondence with the U.N. and was intended to be used to pay a kickback to the Iraqi

government through NAAMAN and his company.

65. On or around November 3, 2002, NAAMAN signed a side letter on behalf of

Alcor promising to pay a kickback of €284,652 to the Iraqi govermnent in exchange for being


66. On or around December 4, 2002, General Manager signed a contract with the

MoO for the provision of TEL to Daura Refinery, subsequently referenced by the U.N. as

Contract 1230520, with a total contract price of€3,131,100, which included the extra 10% fee.

67. On or around February 5, 2003, Aleor's actions caused the New York branch of

BNP-Paribas to send, via an international electronic wire communication, a notice to the Central

Bank ofIraq in Baghdad, Iraq, notifying it of the issuance of a letter of credit in favor of Alcor,

authorizing the eventual payment of€3,131,000 from the OFFP escrow fund maintained at BNP-

Paribas to Alcor, which represented payment for Contract 1230520.

68. On or around July Ii, 2003, the arrival of a shipment of TEL in Iraq caused the

inspection company to send from Iraq to the U.N. in New York, via international wire

communication, notification that the Alcor products purchased pursuant to Contract 1230520 had

been received and inspected by the inspection company in Iraq, thereby triggering payment by

the U.N. to Alcor for Contract 1230520.

69. On or around July 22, 2003, by international wire communication, BNP-Paribas

transferred a total of approximately €3,123,342.43 to Alcor's account in the Union Bank of~.

16


Switzerland in Zurich, Switzerland, in payment for Contract 1230520. INNOSPEC did not pay

the promised kickbacks, but instead kept the additional i 0% and incorporated it into its books as

profit.

70. In or around mid-2003, Innospec, through Alcor, paid NAAMAN approximately

£100,199.77 in commissions on Contract 1230520.

Contract 1230533

71. On or around September 1, 2002, NAAMAN submitted a bid in response to a

tender issued by the MoO for the purchase of TEL for use at Baiji Refinery at a price of £10,437

per metric ton, which included the extra i 0% kickback to the Iraqi government. This fee was

concealed in contracts and correspondence with the U.N. and was intended to be used to pay a

kickback to the Iraqi govermnent through NAAMAN and his company.

72. On or around November 3,2002, NAAM'\N signed a side letter on behalf of

Alcor promising to pay a kickback of£I,708,020 to the Iraqi government in exchange for being


73. On or around November 25, 2002, General Manager signed a contract with thc

MoO for the provision of TEL to Baiji Refinery, subsequently referenced by the U.N. as

Contract 1230533, with a total contract price of£18,788,220, which included the extra 10% fee.

74. On or around February ll, 2003, Alcor's actions caused the New York branch of

BNP-Paribas to senù, via an international electronic wire communication, a notice to the Central

Banc of Iraq in Baghdad, Iraq, notifying it of the issuance of a letter of credit in favor of Alcor,

authorizing the eventual payment of £18,788,220 from the OFFP escrow fund maintained at

BNP-Paribas to Alcor, which represented payment for Contract 1230533.

17


75. On or around July 15,2003, August 19,2003, August 22,2003, October 10, 2003,

and November 7, 2003, the arrival of a shipment of TEL in Iraq causcd thc inspection company

to send from Iraq to the U.N. in New Yark, via international wire communication, notification

that the Alcor products purchased pursuant to Contract 1230533 had been received and inspected

by the inspection company in Iraq, thereby triggering payment by the U.N. to Alcor for Contract

1230533.

76. On or around August 4,2003, September 4,2003, October 21, 2003, and

November 20,2004, by international wire communication, BNP-Paribas transferred a total of

approximately €18,734,849.00 to Alcor's account in the Union Bank of Switzerland in Zurich,

Switzerland, in payment for Contract 1230533. INNOSPEC did not pay the promised kickbacks,

but instead kept the additional 10% and incorporated it into its books as profit.

77. On or arOlmd late 2003 through early 2004, INOSPEC, through Alcor, paid

NAAMAN approximately €601,218.13 in commissions on Contract 1230533.

PAYMENTS TO OFFICIALS OF THE GOVERNMENT OF IRAQ

2004 Long Term Purchase Agreement

78. On or around October 15,2004, General Manager and Offcials A and B executed

a contract for the provision of TEL to Iraq, referred to as a "Long Term Purchase Agreement."

79. On or around October 10,2005, an employee ofNAAMAN emailed Director,

Executive 2, and others, referencing an order for 740 metric tons of TEL from the MoO pursuant

to the Long Term Purchase Agreement, and stating that the letter of credit for payment on the

order would be opened immediately, "provided we share (with Iraqi officialsJ half the currency

18


fluctuation rate (4.5%) which makes it a minimum of2% to their favor..." He went on to state,

"We are sharing most of our profits with Iraqi oftìcials."

80. On or around October 12,2005, NAAAN emailed Director, Executive 2, and

others, stating "With (Director's J instrctions, we proceeded, as we don't want to discuss this

issue in writing any further because it is so delicate, and as per (Director's J instructions that we

don't elaborate in writing, for which I agree. (Director J is going to agree with you on a text that

you will sign and send back to us (3 + 2)."

81. On or around October 15, 2005, Director, after securing authorization from

Executive 2, emailed NAAMAN confirming that the "3 + 2" commission would be paid,

indicating that NAAMAN's commission would include 3% oftle contract price and 2% of the

contract price would be paid to Iraqi officials.

82. On or around October 15,2005, NAAMAN emailed Director, copying Executive

2, thanking them for approving the payments to him and the Iraqi officials.

83. On or around October 20,2005, Director emailed NAAMAN language to use in a

falsified invoicc for rcimbursement of the 2% payment for the Iraqi officials, which totaled

approximately $195,912.78.

84. In or around December 2005 and January 2006, Innospec paid NAAMAN a total

of approximately $195,912.78 to reimburse him for purported payments to Iraqi offcials.

85. On or around February 5, 2006, NAAMAN emailed Director regarding an order

for 2000 metric tons of TEL from the MoO pursuant to the Long Term Purchase Agreement,

stating that the letter of credit would be opened "provided we add up the 2% like last time."

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NAAMAN noted that the Iraqi officials wanted their share paid in advance and stated, "Once, I

received (sic J your go signal in writing, even in email, I wil proceed with my payment."

86. On or around February 6, 2006, Director emailed Executive 2 requesting approval

to pay an additional 2%, "as for the last order."

87. On or around February 7, 2006, Executive 2 emailed Director authorizing the

payment of the additional 2% to Iraqi offcials.

88. On or around February 10,2006, Director authorized NAAMAN to make the

payment of the additional 2% to Iraqi officials.

89. From in or around August through September 2006, Innospec paid NAAMAN

approximately €210,000 to reimburse him for purorted payments to Iraqi officials.

90. In or around Jannary 2007, Innospec paid NAAMAN approximately $139,650 to

reimburse him for purorted payments to Iraqi officials.

9l. From in or around October 2005 to in or around mid-2007, NAAMAN paid

approximately $167,000 to a senior Iraqi MoO oftcial to secure purchases of TEL under the

2004 LTPA.

92. From in or around October 2005 to in or around mid-2007, NAAMAl\ paid

offcials in the Trade Bank of Iraq to secure favorable exchange rates on letters of credit issued

pursuant to purchases under the 2004 L TP A.

MMTTest

93. On or around September 13,2006, NAAMAN emailed Director, advising him

that the MoO was testing MMT advised that if MMT passed the test, the MoO would purchase

350 metric tons ofMMT, reducing the amount of TEL the MoO would purchase from Innospec,

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stating, "My advise (sic J is to follow my plan on the testing of the MMT... and to move forward

immediately on the implementation to make the test fail, so there will be no more MMT ordcr."

94. On or around September 16, 2006, NAAMA faxed Director a letter, attaching a

falsified invoice for $105,000, purportedly to cover "payment for additional teclmical support

and security operations required to nurture and protect the ongoing TEL business in Iraq."

95. On or around September 18,2006, with the authorization of Executive 2, Director

approved NA.AMAN's falsified invoice for payment through Alcor, with the note, "Best to

allocate to agents (sic J commissions."

96. On or arowid February 28,2007, NAAMAN sent a letter to Director enclosing an

English translation of the MoO field trial test tor MMT, stating that MMT had failed the field

test. NAAMAN wrote that in order to ensure that MMT failed the field test, he "had to pay an

additional fee to make sure that the report will come to our advantage." NAAMAN requested an

"additional $50,000/- cost incurred.... Accordingly, enclosed is Interact's invoice for the

additional amount.." and attached a falsified invoice from NAAMAN's company, Interact

S.A.R.L., requesting payment of $50,000 purortedly for "training of Daura Refinery blending

unit team in Jordan..."

97. On or around March 21,2007, NAAMAN sent an email to Director noting that

the payment of the additional $50,000 was stil outstanding.

98. From in or around late September 2006 to in or around April 3,2007, Iiospec,

with the authorization of Executive 2, paid NAAMAN a total of approximately $155,000 to

reimburse him for payments to Iraqi officials.

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2008 Long Term Purchase Agreement

99. In or around 2007, Innospec, through NAAMAN, began negotiations for a new

Long Term Purchase Agreement (the "2008 LTPA") with the MoO.

100. On March 21,2007, NAAMN emailed Director, noting that the payments to

Iraqi offcials to secme the failure of the MMT test "was not the real cost of rejecting MMT..",

but that the costs would continue because NAAMAN had promised Iraqi offcials additional

bribes on all purchases under the 2008 L TP A. NAAMAN stated, "The real cost should be the

increase of our remuneration on TEL for futue business, i.e. the remaining 2000 tons of fiscal

year 2007 and the new L TPA will be 5%. This additional money will cover my promise to these

people for the loss of their remuneration from MMT, which is a very small price we are paying

versus the loss of my money and your money ifMMT were admitted in. I trust that you will

approve this, as I have already promised them..."

101. On or around November 20, 2007, NAAMAN emailed Director suggesting that

the 2008 LTPA-related payments to Iraqi offcials needed to be increased, stating "Remuneration

- have to be raised up to keep everybody on board, happy and satisficd. I suggest that if you

want to raise the price to the $18,000 level, then to give us a higher remuneration percentage to

read seven pct (7%) for a target price of $ 1 8,000 plus. This will leave me a way to negotiate in

my next meeting with them, based on your directions set up last July in Nice meeting (sicJ, i.e.

remuneration vs. volume and price."

102. In or around late 2007 through early 2008, NAAMAN negotiated with a senior

Iraqi MoO official, agreeing to pay the official 2.5% of all sales under the 2008 LTPA, which

would have totaled approximately S2,679,600, in exchange for the contract.

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103. In or around January 2008, NAAMAN and Director traveled to Lebanon to

finalize negotiation of the 2008 LTPA and on or around January 24, 2008, NAAMAN, Director,

and Iraqi Official A executed the agreement pending approval of the Minister of OiL.

104. On or around February 24, 2009, the MoO opened a letter of credit in favor of

Alcor for a total of approximately $17,000,000.

Travel

105. In or around early 2005, NAAMAN emailed General Manager, Director, and

others regarding the travel ofIraqi officials to the United Kingdom, including Iraqi Official B.

In aranging the trip with Innospec's supply chain director, an employee ofNAAMAN stated,

"Kindly arrange for 8 envelopes with the name of each delegate. In each envelope, put GBP

1,000/- except for the envelope for (Iraqi Offcial BJ, put GBP 2,000/- since he is the delegation

head. ¡rnnospec's supply chain directorJ can personally give tliis to each delegate upon arrival in

UK. Please arrange to give the tour guide...enough pett cash to spend with the Iraqi delegates..."

106. In or around June 2005, in connection with the trip to the United Kingdom,

Innospec spent approximately $11,050 on transportation; $8,705 on accommodations for ten

nights; and $10,000 in "pocket money," cash given directly to the officials, for a total of

approximately $29,755.

107. On or around March 15, 2006, an employee ofNAAMAN emailed Director

regarùing reimbursement for a three-day trip of Officials Band C to Dubai. The employee

stated, "(TJhe pocket money of the delegates has been paid by Mr. NAAMAN through myself,

but what we invoiced you is only the official pocket money... I can confirm to you that what Mr.

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NAAAN has paid to each delegates (sicJ pocket money and shopping expenses which is more

than the total amomit in the invoice we sent."

108. On or around March 31, 2006, Innospec paid NAAMAN approximately $13,750

to reimburse him for the costs ofthe travel of Officials Band C to Dubai, including $3,000 in

"per diem" payments.

i 09. On or around August 2,2006, NAAMAN emaileù Director regarding the travel of

Iraqi Offcial C to Amman. NAAMAN stated, "...you know this man is high offcial (sicJ

employee; he is the deputy Minister of Oil responsible for all refineries business. We should

accommodate him to his program as he is doing us a favour by coming... and risking his career.

After you finish the meeting with him by the 13th, he will be travelling (sicJ on your account to

Thailand for one week with his wife..."

Ii O. On or around August 2, 2006, Director emailed NAAMAN, confirming that

Innospec would pay for Iraqi Official C's vacation with his wife in Thailand.

111. On or around August 7, 2006, Director emailed an employee ofNAAMAN,

stating, "As regards payment, please send the invoice to me and I wil arrange this... however, I

do not want to see an invoice for the tickets for his holiday and spending money, rather, I would

be grateful if you could send me an invoice for the $13 ,076 along the lines of "payment for

airfares for trip to Amman for (Iraqi Official C and his wife J for business discussions..."

112. On orarounù August 11,2006, Innospec paid NAAMAN approximately $13,076

to reimburse him for the costs of the travel of Iraqi Official C and his wife to Thailand, including

$5,000 in "pocket money."

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i i 3. On or around January 30, 2008, NAAMAN invoiced Alcor for reimbursement of

$34,480 to cover the cost of the travel of the thl'ee Iraqi MoO officials to Lebanon for the half-

day meeting to finalize the 2008 LIP A, including hotel accommodations for six days, $1,800 for

"entertainment, lunches, & dinners in Lebanon," $1,650 for "mobile phone cards for

international calling + 3 cameras," and $15,000 in "pocket money."

BOOKS AND RECORDS

114. In order to conceal the kickback payments to the Iraqi government for contracts

under the OFFP on the books and records of Alcor, on or around December 19, 2001, January

19,2002, and February i i, 2002; NAAMAN sent Alcor invoices misrepresenting the kickbacks

on Contracts 803584, 930208, and 930299 as "remuneration for after sales services"

115. In order to conceal the payments to the Iraqi officials on orders under the 2004

Long Term Purchase Agreement on the books and records of Alcor, Alcor recorded the

payments to reimburse NAAMAN for the bribes as "commissions."

116. Based on NAAMAN's falsc invoiccs, from in or around 2004 to in or around

2008, Alcor improperly characterized the bribe reimbursement payments to NAAMAN as

"commissions" in its books and records.

117. At the end of each oflnnospec's fiscal years from in or around 2001 to in or

around 2008, the books and records of Alcor, including those containing false characterizations

of the kickback payments given to the Iraqi government and bribes paid to Iraqi offcials, were

incorporated into the books and records oflnnospec for purposes of preparing Iimospec's year-

25


end financial statements, which were fied with the Securities and Exchange Commission in

Washington, D.C.

(All in violation of Title 18, United States Code, Section 37l.)

26


COUNT TWO(Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-l, 18 U.S.C. § 2)

I. Paragraphs I through 24 and 29 through 117 of this Superseding Information are

realleged and incorporated by reference as though set in forth in fulL.

2. From in or around 2004 to in or around 2008, in Iraq, Lebanon. the United Arab

Emirates, and elsewhere outside of the jurisdiction of any paricular state or district of the United

OUSAMA M. NAAAN

States, but within the extraterritorial jurisdiction of the United States pursuant to Title 15, United

States Code, Section 78dd-1 (gl and, therefore, pursuant to Title 18, United States Code, Section

3238, within the venue of the United States District Cour for the District of Columbia, defendant

corruptly did an act outside the United States in furtherance of an offer, payment, promise to pay,

or authorization of the payment of money, directly and indirectly, knowing that all or a portion of

such money would be given to officials of the Iraqi govermnent for puroses of (i) influencing

acts and decisions of such foreign offcials in their official capacity; (ii) inducing such foreign

officials to do and omit to do acts in violation of the lawlùl duty of such officials; (iii) securing

an improper advantage; and (iv) inducing such foreign officials to use their inl1uence with a

foreign govermnent and instrumentalities thereof to affect and influence acts and decisions of

such governments and instrumentalities, in order to assist Innospec, in obtaining and retaining

business for and with, and directing business to, Innospec and Alcor; to wit, paid approximately

$167,000 to a senior Iraqi offcial within the MoO and promìsed to pay an additional 2.5% of the

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total value offuture purchases of TEL, which would have totaled approximately $2,679,600, to

the same senior Iraqi officiaL.

(All in violation of Title 15, United States Code, Sections 78dd-1 and Title 18, United States

Code, Section 2)

DENIS McINERNEYChief, Fraud Section

BY~~.~~. Kathleen M I1mamiTrial Attorney

Nathaniel B. EdmondsAssistant Chief

Fraud Section, Criminal DivisionUnited States Deparment of Justice1400 New Yark Avenue, NWWashington, D.C. 20530(202) 305-7413 (Hammm)[email protected]

Date: June 24, 2010

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v. Count One: 18 U.S.c. § 371 (conspiracy); OUSAMA M ......Accordingly, Innospec was an issuer...

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